N.D. Cent. Code § 41-04-03
(4-103) Variation by agreement - Measure of damages - Action constituting ordinary care
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) The effect of the provisions of this chapter may be varied by agreement, but the parties to the agreement may not disclaim a bank’s responsibility for its own lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. The parties may, however, determine by agreement the standards by which the bank’s responsibility is to be measured if those standards are not manifestly unreasonable.
(1) The effect of the provisions of this chapter may be varied by agreement, but the parties to the agreement may not disclaim a bank’s responsibility for its own lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. The parties may, however, determine by agreement the standards by which the bank’s responsibility is to be measured if those standards are not manifestly unreasonable.
(2) Federal reserve regulations and operating circulars, clearinghouse rules, and the like have the effect of agreements under subsection 1, whether or not specifically assented to by all parties interested in items handled.
(2) Federal reserve regulations and operating circulars, clearinghouse rules, and the like have the effect of agreements under subsection 1, whether or not specifically assented to by all parties interested in items handled.
(3) Action or nonaction approved by this chapter or under federal reserve regulations or operating circulars constitutes the exercise of ordinary care and, in the absence of special instructions, action or nonaction consistent with clearinghouse and similar rules or with a general banking usage not disapproved by this chapter, constitutes prima facie the exercise of ordinary care.
(3) Action or nonaction approved by this chapter or under federal reserve regulations or operating circulars constitutes the exercise of ordinary care and, in the absence of special instructions, action or nonaction consistent with clearinghouse and similar rules or with a general banking usage not disapproved by this chapter, constitutes prima facie the exercise of ordinary care.
(4) The specification or approval of certain procedures by this chapter does not constitute disapproval of other procedures that may be reasonable under the circumstances.
(4) The specification or approval of certain procedures by this chapter does not constitute disapproval of other procedures that may be reasonable under the circumstances.
(5) The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount that could not have been realized by the exercise of ordinary care. If there is also bad faith, it includes any other damages the party suffered as a proximate consequence.
(5) The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount that could not have been realized by the exercise of ordinary care. If there is also bad faith, it includes any other damages the party suffered as a proximate consequence.
(6) Subsection (e) sets forth a rule for determining the measure of damages for failure to exercise ordinary care which, under subsection (a), cannot be limited by agreement. In the absence of bad faith the maximum recovery is the amount of the item concerned. The term “bad faith” is not defined; the connotation is the absence of good faith (Section 3-103). When it is established that some part or all of the item could not have been collected even by the use of ordinary care the recovery is reduced by the amount that would have been in any event uncollectible. This limitation on recovery follows the case law. Finally, if bad faith is established the rule opens to allow the recovery of other damages, whose “proximateness” is to be tested by the ordinary rules applied in comparable cases. Of course, it continues to be as necessary under subsection (e) as it has been under ordinary common law principles that, before the damage rule of the subsection becomes operative, liability of the bank and some loss to the customer or owner must be established.
Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.